New high-speed rail plan faces criticism

High-speed rail's recent pivot toward the Bay Area may have energized the project's Silicon Valley supporters, but it is also raising new concerns from local and state watchdogs about the project's viability.

The rail system, which now has a price tag of $64 billion, would be launched with construction of a stretch between Bakersfield and San Francisco under a business plan that the California High-Speed Rail Authority released last month. This is a dramatic change from the rail authority's prior plan, which called for constructing the entire first segment in Central Valley.

The decision was driven by financial constraints, officials acknowledged at a Monday hearing in front of an oversight committee of the state Assembly. Dan Richard, chair of the rail authority's board of directors, said that financing has limited the agency's range of actions for the program. These restrictions include the rail authority's commitments to the federal government (for the allocated federal funds) and the requirements of Proposition 1A, the voter-approved measure that authorized a $9.95 billion for high-speed rail and related transportation improvements.

"Our charge wasn't to deliver to you a politically correct business plan; it was to deliver a correct business plan," Richard told the Assembly committee.

Jeff Morales, CEO of the rail authority, said the goal of the plan is to get a system segment in place as quickly as possible so as to encourage private investment in future system expansions. Rail officials asserted at Monday's meeting that the document offers, for the first time, a plan for fully funding the first segment. It relies on a combination of bond funds, federal grants and allocations from the state's cap-and-trade program.

But according to the Legislative Analyst's Office, there is a flaw with this plan: It assumes the availability of cap-and-trade revenues (which make up roughly half of the funding plan for the first leg) beyond 2020, something that the current law doesn't authorize and that would require new legislation.

The LAO also noted that the rail authority plans to securitize the net revenues from the first segment to pay for other line segments. But it is unclear, the LAO report states, "whether the system will actually generate an operating surplus."

"Moreover, the plan estimates that the amount of funding that could be generated would fall significantly short of the level needed to complete Phase I and does not identify how this shortfall would be met," the LAO report states.

The rail authority also made a case in the business plan that connecting Central Valley and Silicon Valley will create great opportunities for both regions.

"New job markets will be opened up for people living in the Central Valley, and creating a high-speed connection to the Central Valley would help address the affordable housing crisis in the Bay Area," the business plan states.

But not everyone was thrilled about the change. Rep. Adam Gray, D-Merced, expressed frustration about the rail authority's recent shift away from Merced (which was the line's northern bookend under the prior plan and which would be completely bypassed in the first segment of the new plan) and criticized the rail authority for not notifying the project's proponents in the area about the change before the plan was released.

"There was no heads up, no input, no notice of this significant change," Gray said.

Richard apologized for what he acknowledged to be inadequate communication but argued that the only thing that has changed when it comes to the project's plans is the sequence. No part of the state, he said, will be left behind.

"We're not doing things in a way that would necessarily be optimal or that would be a logical sequence if we didn't have those constraints," Richard said.

Committee Chair Jim Frazier, D-Oakley, also expressed frustration about the shift away from Merced, even as he touted the project's potential to give the Central Valley a boost. He characterized the Merced situation as one in which "people were putting skin in the game and then there was a bait-and-switch."

The LAO also raised concerns about the new plan, noting that the southern terminus of the first segment "does not appear to be an effective approach because it would not have the necessary facilities to support train passengers."

On the Peninsula, where the project has been galvanizing significant opposition since 2009, local officials are also finding causes for concern. Last Wednesday, the Palo Alto City Council's recently reconstituted Rail Committee authorized two of its members to work with city staff on a draft letter to the rail authority, expressing concerns about the project.

Mayor Pat Burt, who sits on the committee and who is also a member of policymaker group that meets monthly to discuss the project, said the business plan raises a "bunch of questionable issues" about the project's cost. He cited the fact that the plan relies on cap-and-trade funds that may never materialize and that it only accounts for the costs of stretching the line from Bakersfield to San Jose and not to San Francisco, the proposed northern terminus of the first segment.

Committee Chair Marc Berman concurred and said that there are "a lot of arguments to make about the inadequacies of the plan, and the impacts it would have."

Comments

8 people like this

Posted by Bob
a resident of Menlo Park: Downtown
on Mar 30, 2016 at 10:49 am

Regardless how many times this gets reported or repackaged it is still and will always be a BOONDOGGLE!

You are absolutely right, Bob, it is, always has been, and so long as it lasts, a BOONDOGGLE. For over eight years now, I've said: "It's not about the train; it's about the money." Morales and Richard are working hard everyday to protect their jobs and their income. That job includes finding dollars and spending them. Keep those office doors open.

Nobody today will be around the year, if ever, that this project is supposed to be finished. That date will keep slipping forward, year after year. But, that's not what's important to its bureaucracy. What's important is to keep this ever-changing project going, come hell or high-water. With Jerry Brown in office and a super-majority of Democrats in the Legislature supporting him, this legacy train project will be unstoppable, even by the Courts.

It's now crystal clear that this project, with its daily changing plans, violates Proposition 1A, which, in turn, should never have been passed by Californians. If several thousand more voters had only known then the realities behind this fraudulent project, we wouldn't be stuck with this mess now. If we all had only listened to then-Democratic State Senators Simitian and Lowenthal and read the old criticisms of the Legislative Analyst's Office and the State Auditor. We were warned, over and over, but did not listen.

There will never be enough funding; that's obvious. There will be, however, just enough funding to keep the project alive for the time being, regardless of its permutations. Unless. . unless enough State Democrats in Sacramento wake up to this incredible waste, see what an enormous fraud it is, and finally vote to stop it.

The project is an outright disaster, but it keeps marching on due to support from Governor Brown. Thus you hear objections, even from some Democrats, but when push comes to shoves, the Governor shoves and forces the Legislators into line.

Thus as expressed by Frazier, he doesn't want this turn into another "Bay Bridge" disaster, but when a final vote comes he,(along with his Democratic Legislators), will most likely tow the line and approve funding.

Posted by pogo
a resident of Woodside: other
on Mar 30, 2016 at 8:32 pmpogo is a registered user.

I would hope that in 1,000 years people are using something a bit more advanced than 1850 train technology.

The reason it isn't necessary is because you can fly more conveniently from any of a dozen airports in Northern California to any of two dozen airports in Southern California in half the time for half the price without our state spending $100+ billion that it doesn't have.

If the rail system was so good, why have they changed the cost, ticket price, speed, frequency, and time to build to the point that the current project looks nothing like what people approved?

Five of the six of the above posters are right. Pretty good for the Almanac. HSR is not only a boondoggle but it sorely misprioritizes our needs. Water and Education should be at the top of the list and with the HSR cost going sky high it would be cheaper for the State of California to buy an airline and charge $50 fares from the Bay Area to LA and San Diego.

I would like to know if there is anyone that sincerely believes a word that comes out of the High Speed Rail Authority. These plans are such a manifest pile of money-sucking garbage that I suspect that even in the most deluded regions of California, people are aware of the truth.

Posted by Grand Theft
a resident of another community
on Mar 30, 2016 at 11:01 pm

High speed rail is a scam involving the frand theft of public funds for special interests that will kick back campaign contributions and/or other payoffs. The project will probably cost at least three times the current concocted figure, and no one will ride the trains following the first terrorist attack.

Posted by build it
a resident of Menlo Park: Menlo Oaks
on Mar 31, 2016 at 5:58 pm

Build it.

The NIMBY's and the "drown guvmint" types always say they are for progress and infrastructure, just not THIS or THAT particular project, and come up with a million reasons. Funny, I can't find nay posts where they supported something that got BUILT, always some hypothetical.

Posted by Menlo Voter.
a resident of Menlo Park: other
on Mar 31, 2016 at 6:36 pmMenlo Voter. is a registered user.

build it:

you think what went on with the Bay Bridge was OK? Cost over runs of 500%. Lets see, current cost projection is $68 billion, so, if you're OK with 500% cost over runs, which are likely by the way, which will mean actual cost of $340 billion. You're OK with that? Really?

Posted by build it
a resident of Menlo Park: Menlo Oaks
on Apr 1, 2016 at 8:57 am

"I can't find any posts where they supported something before it got built, that got BUILT"

(noise, noise, noise)

You couldn't find one either. That's where the anti-infrastructure side (on any issue) becomes exposed. Sure, you say, you would like X happen, but Y is such a better deal, golly, you would be happy to support Y!

Right up to the time until Y is proposed, then all sorts of concerns about Z being a better way than Y.

It's the libertarian version of concern trolling - golly, there HAS to be a better way, when in fact you don't want to spend a dime on infrastructure for the few years you have remaining in the state. Children and grandchildren be damned.

I can't find any posts where they supported something before it got built, that actually got BUILT.

Posted by Apple
a resident of Atherton: other
on Apr 1, 2016 at 10:26 am

@build it

HSR will get built as soon as someone finds the $100B-$200B required to get it done. Any suggestions?

You have a few choices:
* Increase taxes significantly
* Issue more bonds.
* Cut funding for existing programs in education, healthcare, and other transportation programs
* Lobby the federal government to appropriate the bulk of the funding

Also, who is going to indemnify the state if HSR turns out to be a money loser? If it doesn't generate a significant profit, we won't be able to repay the bonds.

CA has the second worst state credit rating in the nation. If it borrows tens of billions more, the state's credit rating will be downgraded to junk status. And then we would be in a world of hurt.

You can wait if and when the federal government appropriates the funding, but I don't see it happening as long as Republicans control the House.

Posted by Joe Walmsley
a resident of Menlo Park: University Heights
on Apr 2, 2016 at 12:57 pm

None of the thoughtful and passionate comments posted here acknowledge the 800 pound gorilla in the room - CO2 emissions and climate change. That is, what effect does the HSR project have on this most fundamental issue of our time? Only by first including that in the discussion can we then go on to sort out other issues like dollar costs, best practices and bureaucratic gamesmanship.

Posted by Bob
a resident of Menlo Park: Downtown
on Apr 2, 2016 at 8:37 pm

So the state is facing a continued water shortage and we're squabbling over money for a rail system whose first leg is SF to Bakersfield. Last time I looked, there wasn't a ton of commuters between those 2 cities. How about addressing the immediate needs (yes, I know we can't use this money).

If and when this ever get built, the technology will already be out-dated not to mention the budget over run, and CA is just teeming with a budget surplus to pay for it. And by the way, exactly how are we paying for all those pensions?

Posted by Apple
a resident of Atherton: other
on Apr 5, 2016 at 9:22 am

To everyone who says we need to build HSR now:

Please put your money where your mouth is by contributing privately to the HSR project. The state of California will even give you a share of the profits (if it ever exists). If you think the ridership will be through the roof, then you will have made an excellent investment.

I don't see any of your running to the bank to invest. Is the expected price too high? Is there too much financial risk? Then, welcome to the realization your fellow Californians have made.

When the project only was expected to cost in the low tens of billions of dollars, Californians were willing to fund it. The rate of return appeared sensible (though it would have been more sensible not detouring through the Central Valley). As the price has skyrocketed, it no longer makes financial sense to build.

And clearly, the anti-progress folk above can not point to any infrastructure project they ever supported, that got built. Always: no, I won't support the commons, I got mine, I'm old and won't use it therefore - screw progress.

If you ALWAYS say no, then folk quit listening to you. Just ask your kids.

from the poster "build it" above, he/she nailed it
*******************
"I can't find any posts where they supported something before it got built, that got BUILT"
(noise, noise, noise)
You couldn't find one either. That's where the anti-infrastructure side (on any issue) becomes exposed. Sure, you say, you would like X happen, but Y is such a better deal, golly, you would be happy to support Y!
Right up to the time until Y is proposed, then all sorts of concerns about Z being a better way than Y.
It's the libertarian version of concern trolling - golly, there HAS to be a better way, when in fact you don't want to spend a dime on infrastructure for the few years you have remaining in the state. Children and grandchildren be damned.
*******************

Posted by Apple
a resident of Atherton: other
on Apr 5, 2016 at 1:31 pm

@Jay

Here are infrastructure projects we should build instead of HSR.

1) Fix roads in the Bay Area
2) Add a second BART transbay tube
3) Rehabilitate the train bridge next to Dumbarton for Caltrain transbay travel
4) More frequent bus service
5) Complete VTA and BART extensions
6) Extend Caltrain to downtown SF (without HSR)
7) Grade separation up and down the Caltrain rail corridor

Each of these projects would improve the daily lives of Bay Area citizens, including the ones who don't use public transportation as there would be less traffic and less pollution from cars sitting in bumper to bumper traffic.

Compare that with HSR, which barely touches regional traffic problems and pollution, yet sucks up all the available money we could be spending to fix these problems.

Posted by Jay
a resident of Menlo Park: Downtown
on Apr 5, 2016 at 2:37 pm

"build it" asked for links to your multitudes of posts that support realistic infrastructure that actually got built (or I assume he/she would accept 'being' built) as opposed to your transparent statements of support for something that isn't going to happen.

Not this trolling of "gosh, I would support that IF it was happening" when in fact the Negative Nancy's will not support infrastructure costs at all.

For example: Apple claims to support a 2nd BART tube and extensions, and the money to do so. Does anyone here think Hank, Pogo, Menlo Voter, etc.. would like to see a parcel tax/bonds, etc.. for that? Of course not. Suddenly, they would claim that a BART tube is 1970's technology, we need to look a a better solution, gosh-golly-gee-willikers, and on and on.

Show us the links.

Or just own it fellas. You don't like building community. It's okay. Every neighborhood has someone yelling - "GET OFF MY LAWN!" Just don't expect a lotta respect from those of us that want to not be stuck in a third world infrastructure while all the other industrialized countries invest in their success.

Posted by Menlo Voter.
a resident of Menlo Park: other
on Apr 5, 2016 at 7:54 pmMenlo Voter. is a registered user.

"Suddenly, they would claim that a BART tube is 1970's technology, we need to look a a better solution, gosh-golly-gee-willikers, and on and on."..

So now you're a psychic? How do you know what any of us would say were these projects put forward? You don't. Not a clue. You are clueless. One can't show the links because these things haven't been proposed, have they? NO! Yours is a false argument. You are asking people to prove something that has never occurred.

Again, as I've said before, if you're so hot for this project YOU pay for it. AND how will you pay for it? Especially, given the fact the state doesn't have close to enough money to finish even a part of this project. You and your ilk continue to demand we build it yet NONE of you can answer a simple question regarding how we pay for it. How about we start there? HOW WILL YOU PAY FOR IT?

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